Wine Equalisation Tax Rebate to change again
The Turnbull Government has announced further changes to the Wine Equalisation Tax (WET) Rebate to benefit grape growing, winemakers and associated tourism in Australia. Read more →

AFS turns 70

In this month’s edition we cover the history of AFS. This year we celebrate 70 years of service in Bendigo and beyond. From humble beginnings to a team of over 70, we take a look back at the history of the firm.

The wonderful work from all of our team over the years has shaped AFS into the successful firm it is today. AFS now has seven Partners and over 70 staff, comparing itself to second-tier firms in Melbourne.

Our culture sets us apart from other accounting firms. It’s the customer service and respect with which we treat our clients that makes us stand out. It defines who we are and how we connect with our clients and community.

Read about where our firm began and how it became all that it is today here.

Click here to read the full newsletter

Also in this issue:

December economic summary

Superannuation reform Bill passed

SuperStream compliance under the spotlight

Small business exit plan

Research and development tax rate change

Primary producer income tax averaging

Simplified record keeping

AFS takes the cup four years running

Toiletry packs for those in need

We hope you find this issue informative, should you wish to investigate any of these matters, we encourage you to contact our office.

How to play the Trump cardOn announcement of Donald Trump’s election as President of the United States our attention quickly turned to the financial markets to gauge the impact.

So, what do we know of President-elect Trump’s policies and what will they mean for us?

Mining shares rally

Global share markets responded positively to Trump’s promise to increase spending on infrastructure and defence and to cut taxes. These policies would provide a shot of fiscal stimulus to the US economy and Australian companies that do business there.

Coal and iron ore prices were already rising but iron ore surged ahead by almost 15% in the week of the election.i Australian resource stocks are up about 35% this year.ii

Trump has also pledged to reduce industry regulation and allow the importation of foreign drugs, which is viewed as positive for Australian financial and healthcare stocks.

The fly in the ointment for the Australian economy and local exporters is Trump’s protectionist trade policy. He has promised to renegotiate free trade agreements and impose high tariffs on Chinese goods. As China is Australia’s top trading partner, what is bad for Chinese trade is bad for us.

The end of the bond bubble?

The economic stimulus of tax cuts and increased spending are expected to increase inflation, which is not a bad thing after years of sluggish growth. With inflation and economic growth on the rise, the US will not need to rely so heavily on monetary stimulus so demand for US government bonds is likely to fall. This would mean lower bond prices and rising yields.

Bond yields were already on the rise, but Trump’s victory has accelerated the trend. US 10-year bond yields have climbed from a low of 1.36% before Brexit to 2.2%. Bond yields are also rising in the UK, Europe and here in Australia.iii

AMP Capital chief economist, Shane Oliver, says the stimulatory effects of a Trump presidency add to evidence that the 35-year rally in bonds is over. However, he expects yields will rise gradually until global growth gains momentum.iii

Interest rates at the crossroads

US Federal Reserve chairwoman Janet Yellen recently confirmed that a December rate rise is still on track on the back of slowly improving economic data. And there are signs that Australian rates may also have bottomed. In a speechiv on 15 November, Reserve Bank Governor Phillip Lowe all but ruled out the need for further rate cuts.

The prospect of gently rising inflation and interest rates are good news for long-suffering investors who depend on income from their investments. Borrowers, on the other hand, may choose to lock in fixed rates at their current low levels.

A softer Aussie dollar

After falling from US77c before the election to as low as US73c, the Australian dollar has been holding firm at around US74 cents on the back of higher commodity prices. Longer term though, the market expects the Aussie dollar to fall further against the greenback.

If America does become more protectionist under President Trump the US dollar is likely to rise too as American companies shift business back home. The flow of funds into the US, together with any softening of global trade would put downward pressure on our dollar. While this is bad news for travellers, a weaker Aussie dollar will help make our exports more competitive.

While uncertainty persists about the policy outcomes of a Trump administration, investors should expect ongoing market volatility. What is certain though, is that Donald Trump’s victory will present challenges and possible buying opportunities for Australian investors. And that’s always been the case whoever sits in the Oval Office.

If you are seeking financial advice we can provide you with a referral to Venture Financial Advisers in our office, please contact us for further details.

i Bassanese bites: A Focus on Trump Trades, 14 November 2016

ii http://www.asx.com.au

iii Oliver’s Insights, AMP, 14 November 2016

iv http://www.rba.gov.au/speeches/2016/sp-gov-2016-11-15.html

https://www.afsbendigo.com.au/wp-content/uploads/2016/12/How_to_play_the_trump_card.jpg6251000AFS Bendigohttps://www.afsbendigo.com.au/wp-content/uploads/2015/05/AFS-Accountants-Bendigo_logo-01-retina.jpgAFS Bendigo2016-12-01 13:01:092018-10-26 07:58:19How to play the Trump card

There’s something about the end of year holiday time that makes people relax and let down their guard a bit. We all spend a bit more, eat a bit more, and stress a bit less. It’s called the ‘silly season’ for a reason.